Total Money Market Fund assets (from Invest Co Inst) surged $65bn to a record
$3.895 TN, with a 52-wk expansion of $730bn, or 23.1% annualized.

Total Commercial Paper outstanding surged $83.1bn this week to $1.764 TN (high
since 9/10), with CP down $49bn over the past year (2.7%). Asset-backed CP
jumped $46bn to $780bn, with a 52-wk decline of $22bn (2.7%).

International reserve assets (excluding gold) - as accumulated by Bloomberg's
Alex Tanzi - were up $583bn y-o-y, or 9.4%, to $6.804 TN.

Global Credit Market Dislocation Watch:

January 7 - MarketNews International (John Shaw): "The Congressional
Budget Office said Wednesday that the fiscal year 2009 deficit will be $1.186
trillion and then decline to $703 billion in FY10. The CBO report represents
the first official confirmation of the staggering decline in the nation's
fiscal situation from less than a decade ago when budget surpluses were on
the indefinite horizon... The CBO report almost certainly understates
the severity of the nation' fiscal woes. For example, the CBO report
does not account for the emerging fiscal stimulus bill that may cost more than
$800 billion over two years."

January 9 - Bloomberg (Erik Holm and Andrew Frye): "Bernard Madoff's
alleged Ponzi scheme may cost insurers who cover financial institutions more
than $1 billion as they pay legal costs for investment managers who gave client
money to Madoff, an industry executive said. Insurers who sell such coverage
never expected, or charged their clients, for the possibility of investor losses
in such a massive fraud, said Greg Flood, the president of the management liability
practice at Ironshore Inc... 'This isn't supposed to happen
in America,' Flood said. 'There will be extraordinary losses paid
for this year.'"

January 7 - Bloomberg (Anchalee Worrachate): "Britain may overwhelm
bond investors with a record number of quarterly debt sales, risking the first
failed auctions since 2002... 'I'm not predicting that we
will have failed auctions, but I can't rule that out,' Robert Stheeman,
chief executive officer of the U.K. Debt Management Office, or DMO, said... 'It's
a big amount of debt to be sold. We are in a very different world than we were
six months or a year ago. But I believe it's a challenge that both we
as an organization and the market will be able to meet.'"

January 7 - Bloomberg (Jana Randow): "The European Central Bank
expanded its balance sheet by 36 percent last year as it tried to revive lending
among banks by pumping cash into the financial system. The ECB held 2.08 trillion
euros ($2.8 trillion) in assets and liabilities on its balance sheet at the
end of 2008, it said today in a statement, up from 1.53 trillion euros at the
start of the year."

January 7 - Bloomberg (Chen Shiyin): "Emerging-market equity
investors withdrew a record $48.3 billion from their funds in 2008 as the global
financial crisis and economic recession hurt demand for riskier assets, according
to data from EPFR Global."

Currency Watch:

The dollar index gained 1.0% this week to 82.66. For the week on the upside,
the British pound increased 4.2%, the Brazilian real 2.9%, the Canadian dollar
1.7%, the New Zealand dollar 1.1%, and the Mexican peso 1.0%. On the downside,
the South African rand declined 5.1%, the Danish krone 3.4%, the Euro 3.2%,
the Swiss franc 3.0%, the Swedish krona 2.9%, the Singapore dollar 1.8%, and
the Norwegian krone 1.6%.

Commodities Watch:

January 7 - Bloomberg (Tony Czuczka): "Prime Minister Vladimir
Putin's decision to confront Ukraine over a gas-pricing dispute reflects
a determination to assert Russian clout, even at the cost of worsening ties
with Europe and a loss of export revenue. The escalating 'pipeline war,' which
culminated today with the cutoff of supplies to the West, may prompt Europe
to diversify its sources and lead Russia to expand energy exports to Asia,
according to Alexander Rahr, a Russia analyst at the... Council on Foreign
Relations. 'To Western elites, this looks like Russian imperialism,
like energy imperialism,' Rahr said... 'There is a danger
of a radical worsening of relations. Maybe we are living in a historic moment
where we will reduce our dependency on Russian gas.'"

January 9 - Bloomberg (Alistair Holloway): "The Baltic Dry Index,
a measure of shipping costs for commodities, advanced for a fourth consecutive
day to the highest in more than two months."

January 7 - Bloomberg (Janet Ong): "Taiwan's exports slumped
by a record 41.9% in December on weaker demand from the U.S. and China for
laptops, mobile phones and computer chips."

India Watch:

January 6 - Bloomberg (Kartik Goyal): "Indian exporters expect
to cut about 10 million jobs by March as the global recession prompts overseas
buyers to cancel orders. 'The year 2009 is going to be the worst year
in the history," A. Sakthivel, president of the Federation of Indian
Export Organisations, told reporters... 'Exporters don't have
orders beyond January and if the present trend continues, there will be approximately
10 million job losses.' Indian exporters presently employ about 150 million
people."

January 7 - Bloomberg (Anoop Agrawal): "India's 10-year
bonds dropped the most since September 2001 after the government said it will
increase debt sales to fund additional spending."

January 9 - Bloomberg (Andrea Tan): "Satyam Computer Services
Ltd. plunged for a second day in Mumbai trading on concern it may run out of
money after Chairman Ramalinga Raju said he falsified the accounts and quit.
Satyam extended its two-day slide to 87 percent since Raju said he inflated
earnings and assets by $1 billion."

Latin America Watch:

January 8 - Bloomberg (Jens Erik Gould): "Mexico reported the
highest annual inflation rate in more than seven years in December as prices
rose for tomatoes, tourist packages and air transportation. Prices rose 6.53%
from a year earlier..."

January 5 - Bloomberg (Andres R. Martinez): "Mexico's manufacturing
index fell to a record low in December because of a worsening recession in
the U.S., the largest consumer of Mexican exports, the Mexican Institute of
Financial Executives said."

Unbalanced Global Economy Watch:

January 9 - Bloomberg (Alexandre Deslongchamps): "Canadian employment
fell by almost twice as much as expected in December, led by construction... Employers
shed a net 34,400 workers after a drop of 70,600 in November, Statistics Canada
said... The jobless rate rose to a three-year high of 6.6 percent from
6.3 percent the month before."

January 8 - Bloomberg (Emma Ross-Thomas): "European confidence
in the economic outlook fell to the lowest on record and unemployment rose
to a two-year high..."

January 9 - Bloomberg (Jennifer Ryan): "U.K. manufacturing plunged
in November, extending its longest streak of declines since 1980, and factories
raised prices at the slowest pace in a year as Britain's recession worsened."

January 7 - Bloomberg (Johan Carlstrom): "Norway's domestic
credit growth slowed to 10.9 percent in November as the economy weakened and
unemployment rose in the wake of the global financial crises."

January 8 - Bloomberg (Zoltan Simon): "Hungarian industrial production
fell the most in more than 16 years in November... Production dropped
10.1% from a year earlier..."

January 6 - Bloomberg (Alex Nicholson): "An index of Russian
service industries from banks to mobile phone retailers plummeted to a record
in December as signs the economy is heading for a recession curbed spending."

Bursting Bubble Economy Watch:

January 9 - Bloomberg (Shobhana Chandra): "The U.S. lost more
jobs in 2008 than in any year since 1945 as employers fired another 524,000
people in December, indicating a free-fall in the economy just days before
President-elect Barack Obama takes office. 'Consumers are now going
to get more and more scared at the prospect of losing their job,' said
Nariman Behravesh, chief economist at IHS Global Insight... The Labor
Department reported that the nation lost 2.589 million jobs in 2008, just shy
of the 2.75 million decline at the end of World War II. The unemployment rate
climbed... to 7.2%... the highest level in almost 16 years."

January 9 - Bloomberg (Bob Willis): "The number of Americans
collecting unemployment benefits surged to a 26-year high as the labor market
worsened in a yearlong recession."

January 7 - Bloomberg (Margaret Chadbourn): "Late payments on
home equity loans rose to a record in the third quarter, as consumers remain
under stress as unemployment rises and the credit crisis persists, the American
Bankers Association reported. Home-equity delinquencies rose to 2.63% in the
third quarter from 2.56% in the previous period..."

Central Banker Watch:

January 9 - Bloomberg (William Sim): "The Bank of Korea cut its
benchmark interest rate by a half-point to a record low... The bank's
board lowered the seven-day repurchase rate to 2.5 percent in Seoul today,
the fifth reduction since early October."

January 6 - Bloomberg (Eugene Tang and Chia-Peck Wong): "China's
central bank and banking regulator are formulating a plan to allow developers
to raise funds through real-estate investment trusts, or REITs, hoping to restart
construction projects hamstrung by financing issues. 'The effort is
to help developers because they have tended to rely on commercial banks as
the primary source of funds," Qi Ji, China's vice minister of housing,
said..."

MBS/ABS/CDO/CP/Money Funds and Derivatives Watch:

January 7 - Bloomberg (Bob Ivry): "Foreclosure sales in the 25
largest U.S. metropolitan areas almost tripled in the first 10 months of last
year as rising unemployment and falling home values made it tougher for homeowners
to sell or refinance their mortgages. Motivated sales, which include foreclosure
auctions and banks selling homes taken over for non-payment, increased 193%
from January to October 2008 from a year earlier... Radar Logic Inc. said..."

Real Estate Bust Watch:

January 8 - Bloomberg (Kathleen M. Howley): "As the U.S. housing
recession enters its fourth year, there's no sign of a recovery because
speculators account for most of the rise in sales. While the purchases are
trimming the inventory of unsold properties, most of those bought by speculators
will likely return to the market when prices rise again, hampering any recovery,
said... Joseph Stiglitz and... Robert Shiller... 'We're
creating a shadow inventory of homes that will be right back on the market
as soon as the economy and the housing market begin to improve,' said
Stiglitz... 'We could see a double-dip in the housing recession
if that happens.'"

January 7 - Bloomberg (Hui-yong Yu): "Vacancies at U.S. malls
and shopping centers approached 10-year highs in the fourth quarter, and are
set to rise further as declining retail sales put more stores out of business,
research firm Reis Inc. said. Regional mall vacancies rose to 7.1 percent last
quarter from 6.6 percent in the third quarter."

January 6 - Bloomberg (Hui-yong Yu): "Vacancies in U.S. office
buildings rose to 14.4% in the fourth quarter, the highest in three years,
and rents fell as companies cut jobs and landlords boosted concessions, according
to Reis Inc."

GSE Watch:

January 8 - Bloomberg (Jody Shenn): "The Federal Home Loan Banks
face potentially 'substantial' losses on mortgage bonds, and in
a worse-case scenario only four of the 12 would remain above regulatory capital
minimums, Moody's... The government may need to put some of the
FHLBs, the largest U.S. borrower after the federal government, into conservatorship
or force them into mergers with others, Moody's said."

Speculator Watch:

January 5 - Bloomberg (Saijel Kishan): "Harley International
Ltd., a hedge fund run by... Euro-Dutch Management Ltd., invested all
its assets with Bernard Madoff... The fund managed $2.76 billion as of
Oct. 31 and returned an average of 10.9% annually since April 1996..."

January 7 - Bloomberg (Pierre Paulden and Jonathan Keehner): "Apollo
Management LP, the private- equity firm led by Leon Black, holds about $2 billion
of loans from Lyondell Chemical Co., which filed for bankruptcy protection,
people with direct knowledge of the matter said."

Fiscal Watch:

January 5 - Bloomberg (Laura Litvan and Brian Faler): "President-elect
Barack Obama told House Speaker Nancy Pelosi he favors a price tag of about
$775 billion for the U.S. economic stimulus plan, a Democratic aide said. Obama
met with congressional leaders from both parties at the Capitol yesterday to
help craft and shore up support for a two-year plan to boost the sagging economy... 'We
have to act now to address this crisis and break the momentum of the recession,
or the next few years could be dramatically worse,' Obama told reporters..."

January 8 - Bloomberg (Terrence Dopp): "Funding for a new rail
tunnel from New Jersey to New York City should be part of a proposed $775 billion
federal economic stimulus package, congressional representatives from the area
told President-elect Barack Obama. Work on the $8.7 billion tunnel may begin
this year and will create 6,000 construction jobs annually for a decade..."

Muni Watch:

January 5 - Bloomberg (Terrence Dopp): "New Jersey Governor Jon
Corzine estimated state revenue will drop to $29 billion next fiscal year,
constraining spending and requiring cuts on top of the $2.1 billion he proposed
last week to close the current budget. Corzine said... revenue for the
year that begins July 1 will fall $1.7 billion below the $30.7 billion now
expected..."

California Watch:

January 7 - Bloomberg (Michael B. Marois): "California moved
closer to running out of cash and being unable to pay its bills after Governor
Arnold Schwarzenegger vetoed an $18 billion package of tax increases and spending
sent to him by Democrats."

New York Watch:

January 9 - Bloomberg (Henry Goldman): "New York City may lose
243,000 jobs, and declining tax revenue because of Wall Street retrenchment
will produce a $7 billion budget gap by the start of the 2011 fiscal year,
the city's Independent Budget Office said."

Crude Liquidity Watch:

January 5 - Bloomberg (Arif Sharif): "Banks in the United Arab
Emirates and Kuwait have the highest exposure to the real-estate industry among
Middle East lenders...Gulf News reported, citing... Credit Suisse... About
35% of U.A.E. bank loans are exposed to the property industry as a significant
portion of corporate and personal loans has been invested in real estate...citing
Credit Suisse analysts Mohammad Hawa and Digvijay Singh."

January 6 - Bloomberg (Angus Whitley): "WCT Bhd. plunged the
most in almost 14 years in Kuala Lumpur trading after the Malaysian engineering
company's $1.3 billion contract to build a racetrack in Dubai was canceled."

I'm not one for excuses, but I've been "under the weather" for a couple days.